Councillors' rejection of Ballsbridge scheme will cost SeanDunne and his like an enormous amount of money writes Justine McCarthy.But the Dublin 4 developers are in this for the long haul SOME of Ireland's wealthiest property developers could be shelling out 80m-a-year in loan interest payments for landmark sites in Dublin 4 which failed to get the development green light from Dublin City Council last week.
But, according to sources close to a number of the developers, they are not perturbed about the escalating costs, which are running into figures that most mortals could not comprehend.
"I doubt if any of those boys are losing too much sleep over it, " opined another heavyweight developer.
An estimated 1.8bn has been splurged by Sean Dunne, Bernard McNamara and Ray Grehan, among others, on strategic properties in the capital's most desirable postal district. But councillors' rejection of a plan to raise the permissible height of buildings means that the developers' grandiose schemes to reconstruct Ballsbridge must remain on ice indefinitely. The council has said it will not revisit the issue for at least a year.
Dunne, who has plans for a 32-storey tower on the existing Jurys/Berkeley Court/Towers hotel lands, spent 370m acquiring the site as part of his dream to turn the area into Dublin's Knightsbridge. The hotels are due to close for business at the end of the summer.
His interest payments to Ulster Bank, based on a 4.5% fixed lending rate, are reckoned to be between 15m and 18m a year if he borrowed the entire amount. He also paid 130m for the Hume House office block near Jurys, plus 200m for his share of AIB's headquarters opposite the RDS.
While the colourful Tullow native has attracted most attention for his Dublin 4 acquisitions, he is pipped by former Fianna Fail county councillor Bernard McNamara in terms of spending. The latter has gone on a retail therapy spree worth nearly 900m, pushing the going rate for land in the area up to 60m per acre. His purchases include the Burlington Hotel ( 288m), the Allianz building ( 100m) and the Irish Glass Bottle site ( 412m).
Another developer, Ray Grehan, bought the former UCD Veterinary College for 171m and David Daly of Albany Homes spent 25m on Franklin House, an office block. Between them, the developers have spent more on buying up Ballsbridge than the total value realised from SSIA accounts in credit unions throughout the country.
Some of the borrowings are likely to have a no-payment period built into the agreement, on the basis that construction cannot begin until the planners amend the height restrictions; something generally regarded as inevitable.
Though the bill for their shopping spree equals 7% of the national debt, they are prepared to engage in a who-blinks-first contest with the planners, not sending in the wrecker's ball until their demands for taller buildings in Ballsbridge are conceded. A minimum of 20 storeys is considered the bare essential if the developers are to mine a profit from their investments.
Any fears that the growing financial pressure of having to sit out the stalemate might damage the national economy are dismissed by economists and other developers. One pointed out that Dunne's 370m price tag for the hotels represents only 1.5% of Irish banks' total lending for real estate.
"I think this will be an annoyance to them but nothing that wasn't expected, " said Paul Murgatroyd, economist with Douglas Newman Good estate agents. "I don't think any of them realistically expected to be on site within three years. They didn't buy the sites with their eyes shut. They knew the existing 12-storey ceiling was there and that they were going to have to win over the residents and the council."
A property developer, who wished to remain anonymous, said: "I wouldn't see any of them going bust. You're talking about five or six acres.
So what, in the overall context of the market?
Down along the docklands in Dublin, there are hundreds of acres being developed with land fetching 25m-an-acre. Development is a long-term game.
When you look at a scheme like Dunne's in Ballsbridge, you're talking about a five or 10-year job.
They're pretty solid people. They all have plenty of money and plenty of assets."
Sunday Tribune
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